As lending standards are beginning to ease, the share of consumers who plan to buy a home has risen more than a point and a half in the last few months. Back in November consumers were at a 5 percent intent level and as of the last month it had risen to 6.9 percent. The rising interest – which are at their highest level in 3 ½ years – may be related to consumer attitudes about the ease of getting a mortgage.
Now that some fiscal uncertainty has been resolved at the federal level, Fannie Mae economists predict an increase in consumer and business spending to bolster economic growth this year, with housing’s contribution expected to double.
In October, new-home sales rose to their highest level since July 2008, and single-family home permits jumped to their highest level since April 2008. In November, housing starts increased for the second straight month, rising to a recovery high and surpassing the 1 million mark for only the second time in the current recovery, Fannie Mae said.
While new-home sales are a bright spot in the housing market, existing-home sales are less so. Such sales have not seen a rebound from the increase in mortgage rates starting in May, a development Fannie Mae says is “worrisome.” Since June, existing-home sales have risen only once and fell for the third straight month in November to the lowest level in 2013. Pending home sales declined for the fifth straight month in October, though November’s figures indicate they have stabilized.
Existing-home sales are expected to rise 1.7 percent in 2014 compared to 2013, while new-home sales are expected to see a 20.2 percent rise. Single-family housing starts are projected to jump even more, by 23.6 percent. All three are expected to see further increases in 2015, by 3.3 percent, 30 percent and 29.6 percent, respectively.
After rising to an estimated average 4 percent in 2013, mortgage rates are expected to increase further this year. Rates for a 30-year fixed-rate mortgage are projected to average 4.8 percent this year and rise to 5.4 percent in 2015.
Refinance loans, on the other hand, fell an estimated 26.7 percent to $1.13 trillion in 2013 and are projected to sink by 58.5 percent in 2014, to $469 billion due to rising mortgage rates. In 2015, economists anticipate another steep drop in refinances: 36 percent.
Fannie Mae anticipates refinancings will drop to 37 percent of mortgage originations this year, down from an estimated 62 percent in 2013, and fall to 26 percent in 2015.The mortgage giant anticipates an average 6.5 percent unemployment rate this year, followed by an average 6.2 percent rate in 2015.
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